Volume 21, Issue 1 (3-2026)
J. Mon. Ec. 2026, 21(1): 20-38 |
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Jamalmanesh A, sayehmiri A, Eghbali A, Yosefi Hajiabad R. Political Stability and the Shadow Economy in Asia: An Empirical Analysis. J. Mon. Ec. 2026; 21 (1) :20-38
URL: http://jme.mbri.ac.ir/article-1-749-en.html
URL: http://jme.mbri.ac.ir/article-1-749-en.html
1- Islamic Azad University
2- Ilam university
3- Assistant professor of Economic, Payame Noor University(PNU)
2- Ilam university
3- Assistant professor of Economic, Payame Noor University(PNU)
Abstract: (590 Views)
This study investigates the impact of political stability and other governance indicators on the size of the shadow economy across Asian countries using panel data estimations. While the existing literature acknowledges the critical role of institutional quality and governance in shaping the informal sector, most prior research has relied on cross-sectional analyses with limited observations. Consequently, evidence based on within-country variations remains scarce. Employing a balanced panel of 34 Asian economies, this paper applies both Ordinary Least Squares (OLS) and Generalized Method of Moments (GMM) estimators to ensure robustness of results. The empirical findings provide strong evidence that higher levels of political stability, government effectiveness, and the absence of violence are associated with a smaller shadow economy. Conversely, declining government stability tends to expand the informal sector. Overall, the results highlight the importance of political and institutional stability as key determinants in reducing the scale of the shadow economy in Asia.
Keywords: Political Stability, Shadow Economy, Governance Indicators, Government Effectiveness, Panel Data.
Type of Study: Original Research - Empirical |
Subject:
Economics
Received: 2 Nov 2025 | Accepted: 1 Feb 2026 | Published: 29 Mar 2026
Received: 2 Nov 2025 | Accepted: 1 Feb 2026 | Published: 29 Mar 2026
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